Trump Administration Grants Fiduciary Rule Prohibited Transaction Relief

March 27, 2017

Employer and other employee benefit plan sponsors, fiduciaries and investment and financial service providers and other plan service providers should review their plans for possible transactions that may qualify for excise tax relief under new guidance issued today by the Internal Revenue Service and Department of Labor.

IRS Announcement 2017-04, scheduled for publication in the Federal Register as  IRB 2017-16 on April 17, 2017, provides relief from the excise taxes under section 4975 of the Internal Revenue Code and any related reporting requirements  to conform to the temporary enforcement policy described by the Department of Labor (DOL) in Field Assistance Bulletin (FAB) 2017-01 with respect to the final fiduciary duty rule published in the Federal Register on April 8, 2016 (81 F.R. 20946), entitled “Definition of the Term ‘Fiduciary’; Conflict of Interest Rule – Retirement Investment Advice” and related prohibited transaction exemptions, including the Best Interest Contract Exemption (BIC Exemption), the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs (Principal Transactions Exemption), and certain amended prohibited transaction exemptions (collectively, PTEs)

The relief parallels similar relief provided by the Department of Labor to these individuals in a recently released Field Assistance Bulletin.

The new DOL and IRS guidance gives temporary relief to the DOL final regulation defining who is a “fiduciary” of an employee benefit plan under § 3(21)(A)(ii) of ERISA as a result of giving investment advice to a plan or its participants or beneficiaries published April 6, 2016.  That final rule, which also applies to the definition of a “fiduciary” of a plan under § 4975(e)(3)(B) of the Code, treats persons who provide investment advice or recommendations for a fee or other compensation with respect to assets of a plan as fiduciaries in a wider array of advice relationships than was true of the prior regulatory definition.   Concurrent with its publication of the final rule, the DOL published the PTEs, which provide two new administrative class exemptions from the prohibited transaction provisions of ERISA and the Code, as well as amendments to previously granted exemptions. 

The PTEs would allow, subject to appropriate safeguards, certain broker-dealers, insurance agents, and others that act as investment advice fiduciaries, as defined under the final rule, to continue to receive a variety of forms of compensation that would otherwise violate prohibited transaction rules, triggering excise taxes and civil liability.

The final fiduciary duty rule became effective on June 7, 2016, and has an applicability date of April 10, 2017. The PTEs also have an applicability date of April 10, 2017, with a phased implementation period ending on January 1, 2018, for the BIC Exemption and the Principal Transactions Exemption. 

President Trump, by Memorandum to the Secretary of Labor dated February 3, 2017, directed the DOL to examine whether the fiduciary duty rule may adversely affect the ability of Americans to gain access to retirement information and financial advice and to prepare an updated economic and legal analysis concerning the likely impact of the rule as part of that examination.

After requesting comments on the final rule on March 3, DOL on March 10, 2017,  announced a temporary enforcement policy related to its proposal to extend for 60 days the applicability date of the fiduciary duty rule and the related PTEs. The policy announced in FAB 2017-01 provides  that:

  • If DOL issues a final rule after April 10 implementing a delay in the applicability date of the fiduciary duty rule and related PTEs, the DOL will not initiate an enforcement action because an adviser or financial institution did not satisfy conditions of the rule or the PTEs during the “gap” period in which the rule becomes applicable before a delay is implemented, including a failure to provide retirement investors with disclosures or other documents intended to comply with provisions of the rule or the related PTEs. 
  • If DOL decides not to issue a delay in the fiduciary duty rule and related PTEs, the DOL will not initiate an enforcement action because an adviser or financial institution, as of the April 10 applicability date of the rule, failed to satisfy conditions of the rule or the PTEs, provided that the adviser or financial institution satisfies the applicable conditions of the rule or PTEs, including sending out required disclosures or other documents to retirement investors, within a reasonable period after the publication of a decision not to delay the April 10 applicability date.

Field Assistance Bulletin 2017-01 provides that, to the extent circumstances
surrounding its decision on the proposed delay of the April 10 applicability date give rise to the need for other temporary relief, including retroactive prohibited transaction relief, the DOL will consider taking such additional steps as necessary with respect to the arrangements and transactions covered by the DOL temporary enforcement policy and any subsequent related DOL enforcement guidance. Following the issuance of the FAB, stakeholders have raised concerns about the potential application of excise taxes under Code § 4975 and related reporting obligations in cases covered by the DOL’s temporary enforcement policy. 

Because the Code and ERISA contemplate consistency in the enforcement of the prohibited transaction rules by the IRS and the DOL, the Treasury Department and the IRS determined it appropriate to adopt a corresponding temporary excise tax non-applicability policy that conforms with the DOL’s temporary enforcement policy described in FAB 2017-01. Accordingly, ,Because the Code and ERISA contemplate consistency in the enforcement of the prohibited transaction rules by the IRS and the DOL, as further reflected in and facilitated by the statutory Reorganization Plan, the Treasury Department and the IRS have determined that it is appropriate to adopt a temporary excise tax non-applicability policy that conforms with the DOL’s temporary enforcement policy described in FAB 2017-01. Accordingly, Announcement 2017-04 provides that the IRS will not apply § 4975 and related reporting obligations with respect to any transaction or agreement to which the DOL’s temporary enforcement policy, or other subsequent related enforcement guidance, would apply. 

The new collective guidance provides a short reprieve from the obligation to comply with the otherwise applicable of the fiduciary rule pending the new administration to review and reconsideration of that rule. How many will welcome this relief, plan sponsors, fiduciaries and service providers need to keep in mind that it’s provisions are temporary in nature and do not preclude a participant or beneficiary from seeking to establish liability of an individual providing advice or assistance with respect to services under the facts and circumstances in an ERISA lawsuit.  Because of the risk of litigation even when the agencies are standing down from enforcement, plan sponsors and fiduciaries and the service providers that assist them with reviewing and making investmentat all times should take care to be able to defend their actions under the fiduciary rules. 


Health Care Org’s ERISA Health Plan Reimbursement Opportunities & Compliance Obligations Free 9/15 Study Group Topic

September 9, 2015

Solutions Law Press, Inc. is happy to share information about this upcoming free health industry study group meeting on 9/15/2015 in Irving, Texas.

NORTH TEXAS HEALTHCARE COMPLIANCE PROFESSIONALS ASSOCIATION

Invites Members and Guests to Our Next Group Luncheon

Employee Benefit Security Administration Insights On Healthcare Organization’s Health & Other Employee Benefit Plan Rights & Responsibilities Under Employee Retirement Income Security Act

Featuring

Kristi Gotcher

U.S. Department of Labor Employee Benefit Security Administration Investigator

Tuesday, September 15, 2015

11:30 a.m. to 1:30 p.m.

DFW Hospital Council Offices

250 Decker Drive

Irving, Texas

RSVP here  by Noon on September 14, 2015

Space Limited!  Register Early To Reserve Your Spot To Participate!

 

Please share this invitation with others who might be interested in this topic or other NTHCPA events!

The North Texas Healthcare Compliance Professionals Association (NTHCPA) invites members and other interested health care compliance professionals to join us on Tuesday, September 15, 2015 from 11:30 a.m. to 1:30 p.m. for our Study Group Luncheon featuring a program on “Employee Benefit Security Administration Insights On Healthcare Organization’s Health & Other Employee Benefit Plan Rights & Responsibilities Under Employee Retirement Income Security Act” from U.S. Department of Labor Employee Benefit Security Administration (EBSA) Investigator Kristi Gotcher.

The health and other employee benefit plan rules of the Employee Retirement Income Security Act (ERISA) generally offer important protections and create significant compliance challenges for health care organizations and providers.  On one hand, health care providers generally rely heavily on their or their patient’s ability to obtain health benefits promised under employer or union-sponsored health plans covering their patients to help reimbursement provider charges.  Meanwhile, health care providers and their leaders also can incur significant liability for failing to comply with ERISA’s rules when establishing and maintaining health or other employee benefit programs for their own employees.  Drawing on her involvement as investigator with the Department of Labor agency primarily responsible for both interpreting and enforcing ERISA’s rules, EBSA Ms. Gotcher will share key updates and insights on both how ERISA and the EBSA can help patients and providers enforce benefit rights under ERISA-covered health plans and key health and highlight employee benefit compliance responsibilities that health care organizations and their leaders need to ensure that their own health and other employee benefit programs meet to avoid violating ERISA.

About the Speaker

Kristi A. Gotcher is an Investigator with the United States Department of Labor, Employee Benefits Security Administration (EBSA) in the Dallas Regional Office.   Kristi began working for EBSA in the Dallas Regional Office in November 2007 as a Benefits Advisor.  She earned her Bachelor of Arts in Social Political Relations from St. Edwards University and a J.D. from Texas Wesleyan University School of Law (now Texas A&M University School of Law).  Ms. Gotcher is licensed to practice law in the State of Texas.

Registration & Meeting Details

The meeting scheduled from 11:30 a.m. to 1:30 p.m. on Tuesday, September 15, 2015 at the DFW Hospital Council Offices located at 250 Decker Drive, Irving Texas.  Participants who timely R.S.V.P. will enjoy a complimentary luncheon. Networking and lunch service will begin at 11:30. Our program will begin at Noon.

NTHCPA encourages members and other interested health care compliance professionals to register early to reserve their spot to participate and to share this invitation with others in the industry who might benefit from participation.

There is no charge to participate in the meeting.  However space is limited and available only on a first come, first serve basis.  To ensure your spot and help us to arrange for adequate space and refreshments for this meeting, R.S.V.P. here as soon as possible and no later than Noon on September 14, 2015.  Walk in guests will be accommodated on a space-available basis only.

Thanks To Meeting Underwriter Stamer ׀ Chadwick ׀ Soefje, PLLC

NTHCPA and its members extend our thanks to Cynthia Marcotte Stamer, P.C. and the other members of Stamer ׀ Chadwick ׀ Soefje PLLC for underwriting this month’s study group luncheon and other support of NTHCPA.

A boutique firm of exceptionally experienced and skilled “big-firm” lawyers committed to changing the way law firms serve their clients, Stamer │Chadwick │Soefje, PLLC delivers sophisticated legal advice and innovative solutions to the most challenging and complex problems. Simply put, Stamer │Chadwick │Soefje, PLLC attorneys are “Solutions Lawyers™.”

Stamer │Chadwick │Soefje, PLLC attorneys deliver sophisticated legal advice and innovative solutions to the most challenging and complex problems. Stamer │Chadwick │Soefje, PLLC attorneys possess the breadth of experience to respond to the unique legal and operational challenges health industry and other clients face and help guide them toward pragmatic resolutions that make sense for them. “Solutions Lawyers™ possess the breadth of experience to respond to the unique challenges our corporate and individual clients face and help guide them toward pragmatic resolutions that make sense for them.

Founded by nationally-known, healthcare and labor & employment attorney Cynthia Marcotte Stamer; labor & employment attorney Robert G. Chadwick; and professional liability and civil litigation attorney Timothy B. Soefje, Stamer │Chadwick │Soefje, PLLC focuses on advising and representing businesses and professionals nationally in the areas of healthcare, cyber liability, ERISA, employee benefits, labor & employment, corporate and commercial litigation, professional liability, construction litigation, and insurance defense.  All three attorneys are rated AV® Preeminent™ by Martindale-Hubbell® Peer Review Ratings™ Ms. Stamer and Mr. Chadwick are both Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, are Fellows in the American Bar Foundation, and recognized as “Top Lawyers” in Labor and Employment Law.  Ms. Stamer also has received recognition as a “Top” attorney in health care and employee benefits law and is a Fellow in the American College of Employee Benefit Council.

Ms. Stamer more than 28 years’ experience advising and representing health industry and employee benefit clients on a wide range of legal, public policy, management and operational concerns as well as extensive leadership and management experience serving in on the board of health industry nonprofit organizations. Nationally recognized for her legal work, advocacy, publications, writings and presentations on health industry concerns, Ms. Stamer provides legal and management advice, training and coaching, defense, public policy and regulatory advocacy to health industry and other clients on health and other regulatory and operational compliance, federal and state public policy and enforcement, managed care and other contracting, reimbursement, fraud, quality, employment, staffing and other workforce, benefits, licensing, credentialing and peer review, safety, disaster preparedness and response, HIPAA and other privacy and data security, corporate governance, investigations and internal controls, and a host of other health industry compliance and risk management and other legal and operational concerns. In addition to her legal experience, Ms. Stamer also contributes her experience and talents to serving in a number of health industry and other civil and professional groups.  Among other things, Ms. Stamer serves as Vice President of the NTHCPA, the RPTE representative to the American Bar Association (ABA) Joint Committee on Employee Benefits Council and scrivener for its annual agency meeting with the Office of Civil Rights, the ABA International Section Life Sciences and Health Law Committee Vice President of Policy, RPTE Liaison to the ABA Health Care Coordinating Counsel, TIPS Employee Benefit Committee Vice Chair, Founder and Executive Director of the Project COPE:  The Coalition on Patient Empowerment, and National Physicians Council for Healthcare Policy.  She also previously served as President and Founding Board Member of the Alliance for Health Care Excellence and its Health Care Heroes and Patient Empowerment Programs, as RPTE Employee Benefits & Other Compensation Group Chair and Welfare Benefit Committee Vice Chair, Exempt Organizations Coordinator of the Gulf States Area TEGE Council, Board President and Audit Committee Chair of the Richardson Development Center for Children ECI Agency, National Kidney Foundation of North Texas Board Audit Committee Chair, the United Way of North Texas Long Range Planning Committee.  She also has and continues to serve in the leadership of many other civic and professional boards, seminar faculties, editorial advisory boards and publishes and speaks extensively on health industry and employee benefit related concerns.

Mr. Chadwick has extensive experience advising and defending health industry and other clients on OSHA and other occupational health and safety, employee benefits, compensation and other labor and employment  concerns as well as defending boards and other management leaders against management liability claims.

Mr. Soefje has extensive experience advising and representing health industry clients and professionals on medical malpractice, officers and directors liability and other professional liability, errors and omissions, construction defect and other litigation and disputes.

For additional information, contact Ms. Stamer cstamer@solutionslawyer.net

About the NTHCPA

NTHCPA exists to champion ethical practice and compliance standards and to provide the necessary resources for ethics and compliance Professionals and others in North Texas who share these principles.  The vision of NTHCPA is to be a pre-eminent compliance and ethics group promoting lasting success and integrity of organizations within North Texas.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns.

Other Helpful Resources & Other Information

We hope that this information is useful to you.   If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available hereYou also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,”  using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail by creating or updating your profile here. You can reach other recent updates and other informative publications and resources.

Examples of some of these recent health care related publications include:


<span>%d</span> bloggers like this: